It’s difficult to be optimistic at the moment. So many businesses are feeling the pinch and finding things difficult. It’s the perfect storm of high interest rates, high inflation and high business failures. According to the BBC, insolvencies are as high as they have been since the financial crisis of 2009.

There are a few businesses that are doing well – BP, Shell and British Gas all recorded bumper profits , whilst HSBC has doubled its profits .

But something doesn’t sit well with me that banks are making billions of profits charging higher interest rates on loans, but not passing them onto savers. And ordinary businesses who took out loans with those very same banks to get through the pandemic, are suffering.  Coupled with HRMC looking to ban directors who are now struggling to repay them, the future does not look bright, and many businesses are facing insolvency.

What can you do if your business is in trouble?

The first thing to do is cut costs – do not buy or spend on anything that is unnecessary – protect your cash like your life depends on it (your business life does). Do a line-by-line review of all your overheads and ask yourself “do I need / still need this cost?” Cut out those costs where the answer is No.

Next, speak to the bank and other creditors, make time to pay arrangements with them and put your business in survival mode. This includes rent, HMRC and other non-essential supplies. When I say non-essential, I mean those that are non-essential to trade.

Then take a long hard look at the business and decide if the business is viable. If it is worth saving then go for it – get new business, and grow – but if it isn’t, if things have gone too far, then it might be time to cut your losses.

The good thing about starting again is that, by and large, the system is designed to protect you the owner. As long as you haven’t done anything wrong, there is a way out and an opportunity to start again.

If you decide the business is not viable, then you must not do anything that increases the loss to your creditors – you must not take out finance, take deposits etc as this could be wrongful or fraudulent trading.

If your business is struggling, get in contact with us sooner rather than later. We, as your accountant, are in the best position to check your viability. Also, if the worst is coming, we have a number of “friendly” insolvency practitioners who can help.

There is life after business failure

I will leave you with a final thought. You may be super stressed, worried and anxious about your business and what is going to happen in the future, but you are not alone. There are 1000’s of businesses going through this, it will be tough, but owners do come out the other side – there is life after insolvency.